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US Taxes Lower Than in Most Developed Countries

iStockphoto/ James Group Studios, Inc.

By Michael Rainey

August 13, 2019

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The Tax Policy Center on Monday released a chart that reminds us once again that taxes are lower in the U.S. than in most developed nations – and that was true even before the Republican tax cuts took effect in 2018.

Drawing on data from the Organisation for Economic Co-operation and Development, which has 36 relatively high-income member nations, TPC said that total tax revenues in the U.S. in 2017 came to about 27% of gross domestic product, nearly 10 points lower than the OECD average of 36%. The U.S. ranks 31st on the measure among the 36 OECD nations.

The Washington Post’s Jeff Stein commented on the data, suggesting that the U.S. could raise considerably more federal revenue if its fiscal policies were more closely aligned with its developed-nation peers: “Another way of thinking about this is the US could raise an additional $18 trillion/decade if it had average levels of taxation of an advanced economy,” Stein tweeted. “And that’s just the average, not Norway/Sweden.”

Tax policies like those in the European Union would raise even more, about $26 trillion over 10 years, said Bobby Kogan of the Senate Budget Committee, while claiming the title of “highest taxed nation in the world” – currently held by France – would generate about $50 trillion more.

Brian Riedl of the conservative Manhattan Institute cited an important reason for the stark difference between the U.S. and many other high-income nations, saying, “The difference is that Europe taxes the hell out of the middle class, and the U.S. doesn't.”